Monopsony is a market where there are many sellers but only interference of a single buyer exists. In Micro economics Theory it is assumed that the monopsonists can set terms of their own while they make purchase or get supplied goods, being with the benefit of only purchaser of a good or service. Single buyer can be in the product market or even in the factor market. If there is a single buyer of a product then he is called Monopsonist in the product market. In this research paper we are taking defense goods as are product and Indian Armed forces as monopsonist. In Monopsony buyers have the ability to affect the prices of the products. Similarly Indian armed forces have the power to affect the Defense goods market or not is the …show more content…
Because of the rise in average expenditure, the marginal expenditure is lying above it. The purchase quantity of monopsonists is denoted by Qm*, here the marginal expenditure and value of marginal demand intersects. The per unit price paid which is denoted by Pm* is derived from the average expenditure supply curve. Price- Pc, Quantity- Qc are increasing in a competitive market. Both of them can found at a point where the marginal value which is the demand and average expenditure which is the supply curve intersect each other.
Now when we have considered and gone through the situation where analogy between the two, competitive buyer and competitive seller we can move to the facts of defense goods.
India is one of the biggest purchaser of defense goods in world. In India arms trade is strictly controlled by government and is also a high stake play spanning diplomacy, foreign policy and trade. For instance, HF-24 Marut
Its an Indian company which is the largest and biggest exporter of commercial trucks in world but India for defense purpose purchases it from a Czech company. The truck model has been the same since 1989 whereas according to a law in India which forces us and say that we have to buy this truck from a shell company in the UK.
Where exactly India stands in its Defense goods can be seen by the data below.
With Respect to